Tongcheng Travel Holdings Ltd

HKEX:780

Earnings Call Transcript 2024-Q1

[Operator]

Good day and thank you for standing by. Welcome to Tongcheng Travel 2024 First Quarter Results Announcement Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to hand you over to the Investor Relations Director of the company, Ms. Kylie Yeung. Please go ahead, Ms. Yeung.

[Kylie Yeung, executive]

Thank you. Good morning and good evening, everyone. Welcome to Tongcheng Travels 2024 first quarter results conference call. I'm Kylie Yeung, Investor Relations Director of the company. Joining us today on the conference call are our Executive Director and CEO, Mr. Hep Ma; our CFO, Mr. Julian Fan; and our Chief Capital Officer, Ms. Joyce Li. For today's call, our management team will provide a review of the company's performance in the first quarter. Hep will brief us on the company's performance, Joyce will discuss our business and operational highlights, and then Julian will address the details of financial performance accordingly. We'll take your questions during the Q&A section that follows. As always, our presentation contains forward-looking statements. Such statements are based on management's current expectations and current market operating conditions, and related to events that involve known or unknown risk, uncertainty and other factors which may cause the company's actual result, performance or achievement to differ from those in the forward-looking statements. This presentation also contains some unaudited non-IFRS financial measures. They should be considered in addition to you, but not as substitutes for measures of the company's financial performance prepared in accordance with IFRS. For a detailed discussion of non-IFRS measures, please refer to our discloser documents in the IR section of our website.Now let me introduce our CEO Hep. Hep will present in Mandarin and we'll have the English translation. Hep, please go ahead.

[Heping Ma, executive]

[Interpreted] 2024 marks the first chapter for China's travel industry and our company. The trajectory of China's domestic travel market has evolved from rapid recovery to sustain growth. In the first quarter, we observed a solid expansion of China's travel industry and the diversification of consumer travel preferences. Amid the rising enthusiasm for travel, we embraced opportunity to advance our business expansion strategy. We reinforced our domestic market position and aggressively expanded our global presence. Furthermore, we actively explored new business opportunities to drive the diversification of our company. We consistently expanded our range of products and services delving into the depths of the travel industry chain to enhance our strategic deployment and unlock further potential. These strategic initiatives have begun to bear fruits. It has not only provided a company with new growth momentum, but also facilitated our development from an OTA to a leading comprehensive travel platform in China.Over the last quarter, we further solidified our industry leading position and achieved a significant year-over-year growth in both revenue and business volume. This demonstrates our immense growth potential and exceptional execution capabilities. Over the past 3 months, the flourishing market and our outstanding business performance has further bolstered my confidence in the company's future growth. During the recent holidays in the second quarter, we have served vibrant travel activities with various user demands remaining robust. At the same time, the Chinese government plays a high priority on the travel industry and consistently promotes and supports its sustainable development.We're confident that our business will maintain its growth momentum this year as we will persistently capitalize on market opportunities and firmly implement our core strategies. For this year, we'll seek progress with the steady pace. We'll concentrate on enhancing user value for diversifying our traffic sources so as to accelerate the expansion of our core business. At the same time, we'll step up efforts to develop new business and strengthening our competitive advantages in the travel industry. This is laying a solid foundation for the company's long-term sustainable development.Next I will hand over the call to Joyce. She'll share with you our business and operational highlights of the first quarter of 2024. Joyce, please go ahead.

[Joyce Li, executive]

In the first quarter of 2024, China travel industry continue to thrive with surging travel [ enthusiasm ] and demand. Aiming this prosperity will draw the tailwind and forge ahead with our expansion strategy along the industry. To our delight, our business continue to show vitality and maintain strong growth for the past quarter, demonstrating the huge potential for our company. As a seasoned player in the transportation business, we have accumulated profound insights into industry and have built business mode as solid as rocks. Over the past 3 months with booming travel demand, our transportation business has experienced a solid growth. We strive to further stress in our market presence in adventurous regions, while continuously penetrating new markets to unlock additional growth potential. For our air ticketing business, we're thrilled to see both volume and the revenue hit new highs of quarter with domestic volume giving around 30% year-over-year growth. Throughout the first quarter of the year, we focus on expanding our user base while further diversifying our user mix by bringing more college students as well as business and leisure travelers. At same time, we firmly execute our international expansion plan and increase investments in the business. We solidify partnerships with our TSPs and endeavor to provide better products and services to our users. Our efforts paid off.Our international air ticketing volume displayed a spectacular growth of more than [ 230% ] way better than overall industry recovery. The strong growth was mainly driven by outbound travel to Southeast Asia countries as well as Japan and South Korea. As for our [indiscernible] business, our people have turned to enhancing monetization capability. Over the past quarter, consistent efforts were made to perfect user travel experience. By optimizing algorithm, our intelligent travel solution system Huixing has not only facilitated user journey, but also add to the revenue growth of the business.After years of endeavor to penetrate low-tier cities, our accommodation business has consolidated its presence in the mass market with value for money positioning, especially targeting users in the second tier and a below cities across China. With the travel sentiment running high throughout the quarter, we see the opportunity and explore more hotel stay scenarios to better serve users' diversified needs, in particular the emerging shop for travel. Meanwhile, we have continuously refined our cross-sell strategy and placed more emphasize on efficiency. As a result, our 15-day cross-sell rate for the quarter increased to 11%.For the past quarter, our domestic room nights reached a solid year-on-year growth of around 10%. Moreover, we've also increased investments in our international accommodation business with efforts focusing on bringing more high quality suppliers across the world as well as enhancing user interaction. Thus, our international room night sold record an astonishing growth of more than 150% year-over-year. We've constantly offered value-added product services to safeguard users' interest surrounding hotel booking and space, which maintained a meaningful contribution to the business. We're committed to achieving long-term growth and aim to establish a proof of influence in China's travel industry. Both our hotel management business and tourism business are integral parts of our strategy to expand vertically around the travel industry in addition to our core OTA business.And for our hotel management business, we have done a comprehensive portfolio of hotel brands ranging from low to high stock, complemented by a hotel membership program that offers members right benefits and privileges. Over the last quarter, our focus remained on expanding our geographical coverage across country and maintaining expeditious growth. By the end of March, the number of hotel stores in operation on Elong hotel technology has increased to more than 1,600 with over 800 stores in the pipeline. More impressively, 2 of our hotel management companies, [ Meihua ]and Bolin has made into top 20 of the China's hotel groups for 2023 ranking 7 and 18 in terms of scale respectively.As for our tourism business, it offers through offline travel agencies stores and applies the business model distinct from our quality business. It consists of self-driven package tool products that require in depth cooperation with the TSPs. For the past quarter, we primarily focus on consolidating the business in terms of its functions following the acquisition of Beijing Tongcheng Tourism, a leading travel agency group in China. By the end of March, Beijing Tongcheng Tourism has around 500 travel agency stores across the country.Turning to our user site, consistent efforts were made to diversify our traffic sources such to further expand our user base. During the past quarter, Tencent ecosystem especially Weixin mini program, remain as our dominant travel traffic channel with emphasis voting to enhancing operational efficiency at multiple fronts within the ecosystem. In the meantime, our standalone app grew magnificently over the quarter as aggressive efforts were made to develop the proprietary channel by launching Blind Box of Train Tickets and the tailor-made marketing activities, we've attracted a considerable amount of younger users to our Tongcheng Travel app making us one of the most popular apps in the travel category.Moreover, we have stressed our cooperation with Alipay and had our air ticketing and hotel booking services accessible just users through its travel portal leading to marvelous growth of our Alipay mini program. Besides our public transit initiative continuously contributed to expansion of our user base. By the end of March, we've successfully tapped into the metro system of several cities in China, including Shanghai, Suzhou, Wuxi, Harbin as well as intercity bus system of hundreds of cities.With our effective initiatives in bright channels both online and offline, we've accumulated the largest user base in China's OTA industry. As of the end of March, our 12-month rolling paying users first client to RMB 229 million, representing a year-over-year growth over 40%. Our MPUs for the first quarter grew by 3% year-on-year to RMB 43 million. While our 12-month accumulated travelers served increased by 57% to RMB 1.8 billion, signaling a healthy uptrend in user purchase frequency.By positioning ourself as a travel platform for new generations, we rolled up series of innovative market campaigns that appeal to young people aiming to certify our fun and entertaining brand personality. Upon Spring festival, we were drawn as minority in April, we joined hands with a local tourism bureau in [ Guilin ] and co-launched an open door marketplace to provide users with a new form of consumption experience.For the past years, eSports has played a vital role in our engagement with the younger users. In the last quarter, we continue to sponsor professional eSports games to further enhance our brand exposure among target group. In addition, our Black Whale membership program maintain a rapid growth during the quarter as we consistently introduce new benefits and privileges surrounding daily consumption and entertainment. By the end of March, the human member of Black-Whale members exceeded 55 million with Apple more than 2.5x that of the general members.We put emphasized on the sustainable development of China's travel industry and are determined to empower industry partners through our technologies and internet expertise. Over the years, we've been strengthening strategic cooperation with airports across China and have support a number of airports in digital transformation with an aim to enhance efficiency of the industry. We've also joined hands with tourism destinations system increasing digital capabilities. Besides our comprehensive portfolio of hotel PMS brands help hotel chains, individual hotels and alternative accommodation improve daily operation, as well as increasing revenue for them.For the past quarter, we continue to optimize our digital solution for hotel operations and promote the healthy growth of the industry. As always, we prioritize our users and are devoted delivery, seamless and comfortable travel experience. Our intelligent Huixing system that only enable users to provide users with accessible and customized travel solution, but also helps maximize the utilization of transportation capacity. Meanwhile, by introducing more automated and intelligent features into our customer service system, we managed to advance our user experience in the customer service progress as well as eliminating the workload burden of customer service staff that's further enhanced efficiency of our customer service.Over the years, we've been endeavoring to improve our ESG performance through incorporating sustainability principles into all aspects of our business. We persistently enhance the disclosure transparency to help investors have better understanding of our company. In the coming future, we'll remain fully committed to pursue better ESG practice aligned with the high international standards.For now, I'll hand over the call to our CFO, Julian. He will walk you through our detailed financials in the first quarter of the year. Julian, please go ahead.

[Lei Fan, executive]

Thank you, Joyce. Good evening everyone. During the past quarter, Chinese travel industry continue to exhibit strong growth momentum. The demand for travel has become increasingly diversified with the people pursuing a wide range of travel experiences across various distances with flawed market opportunities and catered to the diverse travel needs above users under different scenarios. Once again, achieving blended performance, our core OTA business has delivered solid results, while our newly acquired tourism business has been adding growth momentum to our business. In the first quarter of 2024, we obtained upstanding outcomes for both top line and bottom line. We reported a net revenue of RMB 3.9 billion, representing a 50% year-over-year increase from the same period of 2023. During the quarter, we increased the investment in marketing campaigns and advertisement to see market opportunities during China's New Year holiday. We achieved solid adjusted net profit growth of 11% year-over-year to RMB 558 million. Our adjusted net profit margin declined to 14.4%, maybe due to the consolidation of the tourist business, which operates under a different business model compared to our OTA business. Our core OTA business revenue exhibited an excellent growth of 24% year-over-year and recorded RMB 3.2 billion driven by growth across our recommendation reservation, transportation ticketing, and other business segments.Our transportation ticketing revenue for the first quarter was RMB 1.7 billion, representing a 26% increase compared with the same period of 2023. The past quarter has characterized by robust demand across various travel scenarios, which significantly uplifted our ticketing volumes. Furthermore, we continue to dedicate efforts to optimizing our VAF offerings to enhance the monetization. This growth is testament to our operational refinement and effective market share acquisition strategies. Our recommendation reservation business achieved RMB 965 million for the first quarter of 2024, representing a 16% increase from the same period in 2023. The growth is mainly attributable to our dynamic market expansion strategies to seize market opportunities. We also continue to execute our cross-selling strategy and utilize the security and traffic from our transportation visits to other expand our accommodation visit.In the first quarter of 2024, both of our hotel ADR and [indiscernible] Great remain relatively stable. Other visits continue its trajectory of expressional performance with revenue reaching RMB 502 million in the first quarter, representing a growth of 36% year-over-year. The surge is mainly driven by excellent performance of our advertisement, Black-Whale membership, hotel management business and PMS business. Our hotel management business in particular has made significant drive in geographical expansion. Looking ahead, we anticipate these businesses to persist as additional contributors to company's growth. Our tourism business experienced a significant resurgence with revenue achieving RMB 663 million. The solid result is primarily viewed by our successful efforts to capitalize our market recovery opportunities and our strategic enhancement in operational efficiency.In terms of profitability, our gross profit increased by 29.6% year-over-year to RMB 2.5 billion. While gross margin decreased to 65% for the first quarter of 2024, maybe caused by the consolidation of our tourism business. In the first quarter of 2024, our operating profit for the core OTA visits achieved RMB 724 million with the 22.6% margin down from 26.3% year-over-year may be attributable to increased investments in our international business. The operating profit for the tourism visits achieved the RMB 44 million with 6.6% margin. Our adjusted EBITDA increased by 12% and reached the RMB 820 million with a 21.2% margin compared to a 28.3% margin in the same period last year. Adjusted net profit grew by 11% to RMB 558 million with a 14.4% margin compared to a 19.5% margin in the first quarter last year. The consolidation of our tourism business has some impact on our adjusted EBITDA margin and also adjusted net profit margin.Service development and administrative expenses in the first quarter of 2024 increased by 25% from the same period of 2023. Excluding share-based compensation target, service development and administrative expenses in total accounted for 17% of revenue in the first quarter compared with 20.3% of revenue in the same period of 2023. Selling and marketing expenses in the first quarter of 2024 increased by 42% from the same period of 2023. Excluding share-based compensation charges, selling and marketing expenses accounted for 35% of revenue in the first of the quarter compared with 37% of revenue in the same period of 2023.As of March 31, 2024, the balance of cash and cash equivalent restricted cash and short-term investment with RMB 10 billion. Finance travel market has sustained its trajectory of a V growth expansion. In April and May, we continue to witness robust travel enthusiasm across the country. The recent Labor Day holiday was marked by resilient travel demand as travelers explored new destinations and immersed themselves in diverse travel experiences. The data released by governmental authorities indicated a decent year-over-year increase in the volume of domestic tourism during the holiday.Amid this thriving travel landscape, our business once again achieved a solid growth that underscored the successful execution of our strategies. We maintain a positive outlook for China's travel industry in this year. Our conviction is deeply rooted in the transformation in consumer preferences towards more diverse and experiential travel, coupled with continuous support provided by the Chinese government to the travel industry.As we navigate this period of rapid growth in travel industry, we are dedicating our efforts to strengthen our core OTA business. Furthermore, we are expanding our international footprint to assert a more robust global presence. Concurrently, we are advancing our hotel management and tourism sectors to carve out a secondary path for growth. Guided by our strategic vision will poised us to further consolidate our industry leading position, maintaining robust growth and consistent profitability.With that operator we are ready to take questions now. Thank you.

[Operator]

[Operator Instructions] Our first question comes from the line of Brian Gong from Citi.

[Brian Gong, analyst]

So my question is regarding, so how does management see the travel momentum after Labor Day holiday for domestic and outbound OTA business? And do we see any impacts from weaker consumption, bad travelers and also hopefully we think about recovery momentum for the newly acquired pack store business ahead? What is its recovery status now versus 2019 level?

[Lei Fan, executive]

Brain, I would like to provide some more colors on the latest performance, and I would like to Joyce give you more color on the package tour business that we just acquired last year. So actually the travel demand during Labor Day holiday was very solid despite some impacts from the bad weather in southern China, especially in Guanghan province. Maybe you see a lot of the information in the media. According to industry data, actually domestic tourists and revenue also the revenue grew by 7.6% and the 12.6% year-over-year which are 28.2% and the 13.5% increase versus the 2019 respectively during the 5 days labor holiday. It represents a further improvement versus the growth in Chinese New Year this year. And also the growth in Qingming this year, the performance when compare with those performance with 2019. For example, our air ticketing business, once again, surpassed the industry with several multiples and recorded a very robust growth of over 20% in volume in the Labor Day holiday. For April and also for May, we still observed the solid growth in domestic transportation and accommodation visits.Additionally, the international air ticketing and also the accommodation visits that we mentioned a lot of times, we will invest more our sales marketing dollar this year on the global and the international penetration. The performance is also very, very charming. Our accommodation visits and also air ticketing international ticketing visits exhibit about 150% growth year-over-year becoming a significant growth drivers for us. As well we have made the significant drive in executing our multi-channel traffic strategy that we mentioned a lot of times in April and May.The DAU of our standalone apps surge to a record high of over 2 million and the MPUs and the business volume from our standalone apps experience the more than 100% growth compared with the same period of 2023. These achievements demonstrate a solid additional drivers for the future growth of our user base and top line revenue as well. For the full year, we believe that the ballooning travel demand will also continue. Given the resilience and the vitality of Chinese travel industry, it is evident that the consumers both for youngers and elder generations consistently prioritize spending on travel and experiences over physical abuse. According to our observations, we have also noticed the more diverse travel preferences, creating additional opportunities for the industry and also for our company as well. And then for the package tour business, I would like Joyce give you more details.

[Joyce Li, executive]

Brian, in terms of the recovery trend of our RMB 12 million business, we believe that the package tour industry will continue to improve this year. In the first quarter of 2024, the domestic business of Beijing Tongcheng Tourism Investment Group has recovered around 75% of 2019 level. While outbound package tour market only recovered around 30% of 2019 level due to the previous flight capacity, visa issue and supply chain issue. However, we are quite optimistic that the outbound business will rebound and grow continuously this year with positive signals of increasing favorable visa free policies to Chinese travelers as a gradual recovery of flight capacity. By the end of March, as I mentioned before, our pet tour base has around 500 travel agencies cross country, and we're now country seeking franchises join us. We provide support to franchises regarding the brand image products, technological infrastructure, service and staff training, et cetera. We try to be more aggressively in expanding our franchise networks this year, and we're also enhancing the business system to improve operational efficiency of the business. At same time, we're also ramping up effort to expand our product offerings and enrich travel route options by strengthen the connection with the TSPs and [indiscernible] product research and development.In terms of the whole market of the offline traffic business, we believe the industry in China, the packing tour business is huge, but it's quite fragmented, so it's offered tremendous growth potential for us. Despite increasing online travel options, we believe many travelers in China do prefer package tours for their convenience and comprehensive experience. So nowadays, we also observe there is a rise in the tailored themed and high-end patch tours to meet diversified customer demands. So we believe the package tour business will bring significant synergies, which allow us to capture immerse market opportunities.

[Operator]

Our next question comes from the line of Sardonna Fong from UBS.

[Sardonna Fong, analyst]

I'm asking on behalf of Kenneth on the International Business. Could management give more color on the company's progress of international expansion, especially on the recent trends observed during the Labor Day holiday, and how would we think about the growth outlook this year? And what's your key strategy in this segment?

[Joyce Li, executive]

We have witnessed a significantly fast growth in the outbound business in the first quarter with outstanding performance in destinations such as Thailand, Korea, Malaysia, Singapore and Japan, et cetera. As I mentioned, our international accommodation volume in the first quarter have recorded around 150% growth when compared with last year. And the international air ticketing volume in the first quarter have registered more than 260% growth compared with last year. And as an industry, the international flight capacity only recovered to around 70% to 75% of 2019 level at the end of April. So the recovery of our outbound business outperformed industry significantly. And later we also anticipate a robust expansion in outbound travel this year with easier visa access and a gradual resumption of international flight capacity, we have already intensified our effort to pursue the growth of our international business. We have been more aggressive in the marketing activities for international travel projects to enhance our user reach and booster volume of international business. At same time, we continue to spend our product and service offerings for the international travel by forging partnerships with leading international OTAs, wholesalers, airlines and various overseas TSPs.With our dedication to meeting the diverse amounts of our users, we're committed to continuous grow exploration and innovation in the new product and services. For the outbound travel business, given our substantial growth in user base over the past few years, we see this users as a cornerstone for our expansion into the bound travel market. As such, we focus on advancement of outbound air ticketing, hotel booking and package tour business. Specifically within our OTA business, our goal is to increase user awareness and recognition of our outbound travel services by launching more attractive and innovative promotions. We also allocate more resources to research and development to enhance our outbound travel product services.Our package tour business, as I mentioned, we aim to broaden both online and offline customization channels to capitalize on the recovery of the outbound travel. And furthermore, we endeavor to expand our product offerings, enrich travel route options and elevate overall customer experience. And also for the overseas local markets, we are stepping our efforts in trial, expanding our business through investments in overseas GSPs and setting up offices in overseas markets. So in conclusion, we'll put more emphasis on development of international business, which we believe will become an important growth driver for the company in the next few years.

[Operator]

Our next question comes from the line of Alex Poon from Morgan Stanley.

[Chun Poon, analyst]

My question is regarding the hotel business. Can you please talk about the growth of hotel business for the rest of 2024 given the higher base in Q1, higher base starting from Q2 and we have a lot of different segments growing at the same time. And if you can also talk about the impact of supply growth driving the RevPAR and ADR decline for the industry. Does it stimulate more demand growth or it is hurting the whole industry GMV growth overall?

[Lei Fan, executive]

In terms of the accommodation reservations growth, yes, as we mentioned in the Quarter 1, the growth rate is only 16% compared with last year, actually the growth rate is a little bit slower compared with 2023, compared with 2022 or 2019. That is mainly because in Quarter 1 last year or 2023, it just a reopening from the COVID-19. And also in that spring festival, a lot of pump up demand released, and especially for the short haul travel which is advantageous for our company. So actually last year spring festival, the short haul traveling as especially high banks in the last year. So that is why in the first of quarter our accommodation revenues revenue just a recorded at 16%, but we think it's still a very good numbers in the industry. And in the second quarter, actually, the accommodation reservations revenue growth is still met some challenge because of the high base in last Qingming and Labor Day because of the short haul still have some pump up demand last year. But I think everything will be normalized in the quarter 3 or quarter 4, the second half of the year. And we expected a higher growth rate in accommodation segment in the second half.So that is the general expectation and for the transportation, this is not have this impact. So you can see that in the first quarter and second quarter we also expected a high growth rate higher than accommodation growth rate for our transportation ones. In terms of the ADR and the commission, actually maybe the industry has some impact on the ADR, because last year the ADR is really high but for our company, we don't observe the ADR is reduced. The commission rate is also very stable year-over-year.

[Operator]

Our next question comes from the line of Thomas Chong from Jefferies.

[Thomas Chong, analyst]

My first question is about our user acquisition and engagement strategies. Can management comment about if there's any latest updates? And my second question is about our use of cash and our [ post ] on M&A.

[Joyce Li, executive]

You can see that for the user growth strategy for this year, we will continue to explore diversified channels to acquire high value users. For example, we'll continue to [indiscernible] our cooperation with Tencent. We'll also increase investment to rise user collision channels such as pre-installed and app store. We'll further enhance our own app to attract incremental users and cultivated role users. In addition, we plan to allocate resources towards brand advertising to inforce our brand image and increase awareness. We believe that brand name is the long-term investment that requires consistent effort such and build our brand equity. And as we have already gained substantial number of paying users, our focus this year is to continue enhancing user value rather than solely spending our user base. We'll emphasize on enhancing user engagement and increasing [ app pool ] through the targeted promotions.Firstly, we will invest in tailor promotion and refine our recommendation algorithm to encourage cross-selling between our transportation and accommodation services. I think this approach aims to boost revenue per transaction and overall take rate. Secondly, we'll remain committed to promoting our best product services tailored to our user travel needs. For example, we'll further optimize our Huixing system, which provides intelligent travel solution to our users and help improve our monetization. Besides I think the new promotions for our innovative product services will be introduced across different scenarios to enhance user satisfaction. Certainly, we continue to extend our product service offerings platforms. For example, the package tour products such enhancing the user purchase frequency and user value on platform.Furthermore, we'll continue to promote our Black Whale members program to foster growth royalty among our users, with an aim to increase our overall app pool and purchase frequency. So as of the end of March, 2024, our rolling up when user purchase frequency in the past 12 months continue to increase month-by-month and surpass the levels in 2019. Our 12-month number of travelers increased by 57.4% to 1.8 billion is signifying a noticeable increase in user purchase frequency to nearly 8x per year, which was much higher than more than 5x in 2019. So with our consistent efforts in improving user value, you can see app pool for 12 months ended the end of the March 1 increased over RMB 55. We expect these indicators will continue to grow this year.And in terms of your second question, the use of the cash and M&A strategies, I think the first all we'll emphasize that we'll allocate cap towards our business operations. The investments will continue to support our organic growth structures, including developing the new technologies, introducing new products and services, expanding into the new markets, improving the internal efficiency, et cetera. And secondly, we'll also allocate capital towards investing or acquiring other companies to complement our existing operations. For example, the expansion in the international business and hotel management business. Last but not least, we're also grateful for support of all our shareholders and will allocate capital towards returning value to our shareholders.

[Operator]

We have now reached the end of the question-and-answer session. Thank you very much for all your questions. I'll now turn the conference back to Ms. Kylie Yeung for closing commands.

[Kylie Yeung, executive]

Thank you. We are closing the call now. If you wish to check out our presentation and other financial information, please visit the section of our company website. Thank you and see you next quarter.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]